Business Secretary warns US owner of Poundland over possible insolvency

UK Business Secretary Jonathan Reynolds said he and the Prime Minister are "deeply concerned" about the uncertainty surrounding Poundland's future and are reviewing options. The government is requesting urgent information to confirm that Gordon Brothers, the US private-equity owner, is complying with legal obligations in its stewardship of the retailer.

Reynolds added that the private-equity firm has a moral duty to support the business, which is expected to generate a £15 million profit this year. He warned that if a viable bid was rejected, the owners would have "serious questions to answer" and the government wants to know why the offer was not accepted.

The Telegraph reported that Poundland's directors have filed a notice to appoint administrators despite recent sales growth of 6.7% in September and 8.4% in early October. The retailer employs about 12,000 staff across 600 stores.

Reynolds said the government is ready to act to protect workers and their families and is supporting efforts to find a buyer, though it will not provide financial assistance. The company is moving toward administration after Gordon Brothers turned down a bid from Martin Property Group, which was backed by Poundland's management, due to the buyer's refusal to meet demands for an upfront repayment of a £30 million shareholder loan.

Conservative Treasury spokesman Robert Jenrick called for the government to ensure Poundland is not "stripped for parts" by its American owners and accused Gordon Brothers of "crony capitalism". Potential purchasers include Poundstretcher, The Range, Iceland and Lidl, but job protection cannot be guaranteed in any break-up.

Founder Steve Smith warned that insolvency could lead to up to 30,000 job losses across the retail sector when supplier impacts are considered. The Pensions Regulator declined to comment on any investigation into the retailer's pension scheme. Gordon Brothers was contacted for comment but did not respond.